FOR IMMEDIATE RELEASE: CONTACT: Dwayne Powell, CEO
870-802-1700
POCAHONTAS BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS
Jonesboro, Arkansas, April 28, 2004, Pocahontas Bancorp, Inc. (Nasdaq-NMS:PFSL)
announced earnings for the second quarter of the fiscal year ending September
30, 2004. Net income was $1.4 million for the quarter ended March 31, 2004,
compared to net income of $1.0 million for the quarter ended March 31, 2003, an
increase of $0.4 million or 40.0%. Basic earnings per share was $0.32 and
diluted earnings per share was $0.31 compared to basic and diluted earnings per
share of $0.24 for the same period last year. During the quarter ended March 31,
2004, the Company sold its Strawberry, Arkansas operations resulting in a gain
of $139,000.
Net interest income before provision for loan loss for the quarter ended March
31, 2004 was $5.0 million compared to $4.4 million for the quarter ended March
31, 2003, an increase of $0.6 million or 13.6%. The increase was primarily due
to a decrease in interest expense of $0.7 million or 14.6% offset by a decrease
in interest income of $0.1 million or 1.1%. The Company's net interest rate
spread was 3.18% for the quarter ended March 31, 2004 compared to 3.04% for the
quarter ended March 31, 2003. Net interest margin was 3.09% for the quarter
ended March 31, 2004 compared to 2.95% for the quarter ended March 31, 2003.
Both the yield on average interest earning assets and the cost on average
interest bearing liabilities for the quarter ended March 31, 2004 decreased when
compared to the rates for the same period last year. The decrease in the cost on
average interest bearing liabilities decreased 68 basis points while the yield
on average interest earning assets decreased 54 basis points, resulting in the
increase in net interest income for the quarter ended March 31, 2004.
Provision for loan losses for the quarter ended March 31, 2004 was $0.3 million
compared to $0.1 million for the quarter ended March 31, 2003, an increase of
$0.2 million. Management has a policy of periodically reviewing the credit
quality of the loan portfolio in order to establish a sufficient allowance for
losses on loans. The provision for loan loss for the quarters ended March 31,
2004 and 2003 reflected management's estimate of the amount of allowance for
loan losses required based on management's current judgments about the credit
quality of individual loans and segments of the loan portfolio. Management
believes that it has appropriately identified all problem loans included in the
Company's loan portfolio and has either charged-off or provided an appropriate
valuation allowance based on its estimates of collectability and credit quality
of such loans. Based on presently available information, management believes
that the current allowance for loan losses is adequate; however, changing
economic and other conditions may require future adjustments to the allowance
for loan losses.
Non-interest income decreased to $1.6 million for the quarter ended March 31,
2004 compared to $1.7 million for the quarter ended March 31, 2003, a decrease
of $0.1 million or 5.9%. The decrease in non-interest income was due to a $0.2
million decrease in both fee income and gain on the sale of loans, partially
offset by a $0.2 million increase in net trading gains and a $0.1 million gain
on the sale of the company's branch located in Strawberry, Arkansas during the
quarter ended March 31, 2004, compared to the quarter ended March 31, 2003. A
subdued refinancing environment during the quarter ended March 31, 2004 resulted
in a decreased number of loans sold and therefore a lower gain on sale of loans.
Total operating expenses were $4.1 million for the quarter ended March 31, 2004,
compared to $4.3 million for the quarter ended March 31, 2003, a decrease of
$0.2 million or 4.7%. The decrease in operating expense was primarily the result
of management's ongoing efforts to monitor expenses and increase efficiency.
Net income for the six month period ended March 31, 2004 was $2.8 million,
compared to net income of $2.2 million for the six month period ended March 31,
2003, an increase of $0.6 million or 27.3%. Basic earnings per share was $0.62
and diluted earnings per share was $0.61 compared to basic earnings per share of
$0.53 and diluted earnings per share of $0.52 for the same period last year.
During the quarter ended March 31, 2004, the Company sold its Strawberry,
Arkansas operations resulting in a gain of $139,000.
Net interest income before provision for loan loss for the six month period
ended March 31, 2004 was $10.0 million compared to $8.8 million for the six
month period ended March 31, 2003, an increase of $1.2 million or 13.6%. The
increase was primarily due to a decrease in interest income of $0.3 million or
1.6% and a decrease in interest expense of $0.9 million or 9.5%. The Company's
net interest rate spread was 3.10% for the six month period ended March 31, 2004
compared to 3.21% for the six month period ended March 31, 2003. Net interest
margin was 3.01% for the quarter ended March 31, 2004 compared to 3.10% for the
quarter ended March 31, 2003. Both the yield on average interest earning assets
and the cost on average interest bearing liabilities for the six month period
ended March 31, 2004 decreased when compared to the rates for the same period
last year.
Provision for loan losses for the six month period ended March 31, 2004 was $0.5
million compared to $0.8 million for the six month period ended March 31, 2003,
a decrease of $0.3 million or 37.5%. Management has a policy of periodically
reviewing the credit quality of the loan portfolio in order to establish a
sufficient allowance for losses on loans. The provision for loan loss for the
six month period ended March 31, 2004 and 2003 reflect management's estimate of
the amount of allowance for loan losses required based on management's current
judgments about the credit quality of individual loans and segments of the loan
portfolio. Management believes that it has appropriately identified all problem
loans included in their loan portfolio and has either charged-off or provided an
appropriate valuation allowance based on its estimates of collectability and
credit quality of such loans. Based on presently available information,
management believes that the current allowance for loan losses is adequate;
however, changing economic and other conditions may require future adjustments
to the allowance for loan losses.
Non-interest income decreased to $2.9 million for the six month period ended
March 31, 2004 compared to $4.3 million for the six month period ended March 31,
2003, a decrease of $1.4 million or 32.6%. The decrease in non-interest income
was primarily due to the $0.4 million or 80.0% decrease in the gain on the sale
of branches to $0.1 million for the six month period ended March 31, 2004 from
$0.5 million the six month period ended March 31, 2003 and a decrease of $1.0
million or 72.7% in the gain on sale of loans for the six month period ended
March 31, 2004 to $0.3 million from $1.1 million for the six month period ended
March 31, 2003. The $1.6 million gain on sale of loans for the six months ended
March 31, 2003 included the sale of a loan package that provided $0.6 million of
the gain on sale of loans which in addition to a subdued refinancing environment
during the six months ended March 31, 2004 resulted in a decreased number of
loans sold and therefore a lower gain on sale of loans.
Total operating expenses were $8.2 million for the six month period ended March
31, 2004, compared to $8.8 million for the six month period ended March 31,
2003, a decrease of $0.6 million or 6.8%. Compensation expense decreased by $0.2
million due to the recognition of additional expense in 2003 related to a
deferred compensation agreement entered into with a retiring officer of the
Company during the six month period ended March 31, 2003. The decrease in
advertising expenses during the six month period ended March 31, 2004 was the
result of the Company handling the advertising campaign internally compared to
outsourcing to an advertising firm during the six month period ended March 31,
2003. Also, the decrease in operating expense was the result of management's
ongoing efforts to monitor expenses and increase efficiency.
Total assets decreased to $731.0 million at March 31, 2004 from $763.5 million
at September 30, 2003, a decrease of $32.5 million or 4.3%. The decrease was
primarily the result of the sale and call of $49.4 million of securities, and
principal payments and maturities of $30.1 million in securities, which was
partly offset by $37.9 million in securities purchases, resulting in a net
decrease in investment securities of $38.1 million or 13.0%. The yield on
average interest earning assets at March 31, 2004 was 5.59% compared to 6.05 %
at September 30, 2003.
Total loans receivable decreased to $381.9 million at March 31, 2004 from $389.0
million at September 30, 2003, a decrease of $7.1 million or 1.8%. During the
six-month period ended March 31, 2004, the Company sold $11.4 million of loans
held for sale. Total nonperforming loans increased to $5.9 million at March 31,
2004 from $5.6 million at September 30, 2003, an increase of $0.3 million or
5.4%.
Total deposits decreased to $537.8 million at March 31, 2004 from $586.1 million
at September 30, 2003, a decrease of $48.3 million or 8.2%. The decrease in
deposits was partially the result of a $12.7 million decrease from the sale of
the Company's branch located in Strawberry, Arkansas
Total Federal Home Loan Bank advances increased $13.3 million or 13.2% to $114.0
million at March 31, 2004 from $100.7 million at September 30, 2003. The Company
used low rate advances to offset the decrease in deposits, fund investment
purchases and loan disbursements.
Pocahontas Bancorp, Inc. is a unitary thrift holding company, which owns First
Community Bank, a federally chartered savings and loan. First Community Bank
conducts business from 20 offices located primarily in Northeast Arkansas.
Pocahontas Bancorp's common stock is traded on the NASDAQ National Market under
the symbol PFSL.
POCAHONTAS BANCORP, INC
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
- -----------------------------------------------------------------------------------------------------------------
March 31, September 30,
2004 2003
ASSETS
Cash $ 37,769,558 $ 22,020,489
Cash surrender value of life insurance 7,587,714 7,340,618
Securities held-to-maturity, at amortized cost 3,083,934 5,403,862
Securities available-for-sale, at fair value 255,542,771 293,569,266
Trading securities, at fair value 2,019,506 1,497,252
Loans receivable, net 381,302,374 385,872,017
Loans receivable held for sale 581,980 3,130,238
Accrued interest receivable 3,789,194 5,161,006
Premises and equipment, net 13,703,637 13,998,751
Federal Home Loan Bank Stock, at cost 6,155,400 5,583,700
Goodwill 8,847,572 8,847,572
Core deposit premiums, net 6,783,359 7,880,406
Other assets 3,808,946 3,182,703
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TOTAL ASSETS $ 730,975,945 $ 763,487,880
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 537,805,490 $ 586,092,147
Federal Home Loan Bank advances 114,017,033 100,693,629
Deferred compensation 2,556,750 2,885,238
Accrued expenses and other liabilties 4,150,193 3,899,149
Trust preferred securities 16,931,533 16,921,150
------------- -------------
Total liabilities 675,460,999 710,491,313
STOCKHOLDERS' EQUITY:
Common stock 75,130 74,970
Additional paid-in capital 56,677,270 56,533,430
Unearned ESOP Shares (1,100,167) (538,121)
Accumulated other comprehensive income 1,767,624 899,339
Retained earnings 22,267,289 20,199,149
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79,687,146 77,168,767
Less treasury stock, at cost (24,172,200) (24,172,200)
------------- -------------
Total stockholders' equity 55,514,946 52,996,567
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 730,975,945 $ 763,487,880
============= =============
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (UNAUDITED)
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Three Months Ended Six Months Ended
March 31 March 31
2004 2003 2004 2003
INTEREST INCOME:
Loans receivable $ 5,946,192 $ 6,675,796 $ 12,159,899 $ 13,657,328
Investment securities 3,196,538 2,557,352 6,436,348 4,622,122
----------- ----------- ------------ ------------
Total interest income 9,142,730 9,233,148 18,596,247 18,279,450
INTEREST EXPENSE:
Deposits 2,964,550 4,226,693 6,407,451 8,201,269
Borrowed funds 826,328 259,451 1,544,372 582,591
Trust preferred securities 315,375 318,402 629,569 656,808
----------- ----------- ------------ ------------
Total interest expense 4,106,253 4,804,546 8,581,392 9,440,668
NET INTEREST INCOME 5,036,477 4,428,602 10,014,855 8,838,782
PROVISION FOR LOAN LOSSES 350,000 100,000 500,000 845,000
----------- ----------- ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,686,477 4,328,602 9,514,855 7,993,782
OTHER INCOME:
Fees and service charges 745,435 942,916 1,535,957 1,877,426
Gain on sale of loans 252,340 513,731 602,421 1,641,575
Gain on sale of securities 52,458 232 39,535 5,728
Trading gains, net 287,231 48,000 440,453 87,400
Gain on sale of branches 139,334 - 139,334 513,595
Other 129,720 172,449 221,984 222,387
----------- ----------- ------------ ------------
Total other income 1,606,518 1,677,328 2,979,684 4,348,111
----------- ----------- ------------ ------------
OPERATING EXPENSE:
Compensation and benefits 2,359,192 2,415,659 4,771,207 5,008,595
Occupancy and equipment 723,091 634,761 1,451,849 1,253,483
Insurance premiums 92,894 87,929 163,280 150,717
Professional fees 240,268 277,019 468,707 547,746
Data processing 172,209 181,956 338,702 361,336
Advertising and donations 71,674 110,644 142,041 281,697
Office supplies 50,996 88,152 120,871 162,796
REO and other repossessed assets 112,875 153,038 177,665 274,574
Other 290,836 375,246 611,831 736,335
----------- ----------- ------------ ------------
Total operating expense 4,114,035 4,324,404 8,246,153 8,777,279
----------- ----------- ------------ ------------
INCOME BEFORE INCOME TAXES 2,178,960 1,681,526 4,248,386 3,564,614
INCOME TAXES 747,069 657,257 1,451,000 1,327,257
----------- ----------- ------------ ------------
NET INCOME $ 1,431,891 $ 1,024,269 $ 2,797,386 $ 2,237,357
(Continued)
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (UNAUDITED)
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Three Months Ended Six Months Ended
March 31 March 31
2004 2003 2004 2003
OTHER COMPREHENSIVE INCOME (LOSS),
NET OF TAX:
Unrealized holding gain (loss) on securities
arising during the period $ 1,582,539 $ (36,842) $ 894,378 $ 167,827
Reclassification adjustment for (gains)/losses
included in net income $ (34,622) $ (153) $ (26,093) $ (3,780)
Other comprehensive income (loss) $ 1,547,917 $ (36,995) $ 868,285 $ 164,047
COMPREHENSIVE INCOME $ 2,979,808 $ 987,274 $ 3,665,671 $ 2,401,404
EARNINGS PER SHARE:
Basic earnings per share $ 0.32 $ 0.24 $ 0.62 $ 0.53
Diluted earnings per share $ 0.31 $ 0.24 $ 0.61 $ 0.52